Communication collaboration to boost Microsoft, Nortel

Microsoft Corp. and Nortel Networks Ltd. will unify theirefforts to develop “unified communications” products to break downthe barriers between telephony, voice mail, e-mail andinstant-messaging systems.

The companies have struck a four-year alliance to jointlydevelop and sell unified communications systems, they saidTuesday.

The companies’ goal is ultimately to replace the office PBX(private branch exchange), voice-mail system, e-mail server andinstant-messaging system with a single software platform based onproducts such as Microsoft Office Communications Server 2007 andMicrosoft Exchange Server 2007 unified messaging.

As part of the deal, Nortel will move its traditional businessphone systems onto Microsoft’s unified communications softwareplatform, adding additional functionality with its ownsoftware.

Microsoft will have “deep collaboration” on development of theproducts, which will include call-center applications, telephony and mobileaccess systems, and data-networking infrastructure, the companiessaid.

The pact leaves no doubt that Microsoft is in the voicecommunications business, said Microsoft

Chief Executive Officer Steve Ballmer during a press conferencebroadcast over the Web.

“With this alliance, we punctuate the fact that voice isabsolutely a part of Microsoft unified communications,” Ballmersaid. “Like every other element of our information-workerportfolio, [voice must] really be very seamlessly integrated,intuitively delivered and consistently managed.”

The alliance is seen as a boon to Nortel’s credibility as wellas a key to the telecommunications market by at least one Canadianindustry analyst.

“This was a good move by Nortel,” said Roberta Fox, principal ofthe Fox Consultancy Group Inc. headquartered in Mount Albert,Ont.

She said Nortel has been plagued by issues of instability. “Butit speaks volumes if a company like Microsoft shows confidence inNortel.”

Microsoft, according to Fox, will benefit from Nortel’sworldwide network in the telecom industry. “Microsoft willcertainly leverage Nortel’s extensive network and sales forcearound the globe.”

“If you’re going to venture into new territory, you’ll want togo with a major player,” said Fox.

Microsoft sees unified communications as a way to communicatevia e-mail, voice mail, VOIP (voice over Internet Protocol) instantmessaging and video in a professional environment, using a singleidentity. Microsoft’s Windows Live Messenger service already linksmany of those functions to a Hotmail e-mail address forconsumers.

The companies will form joint teams to develop products forfixed, wireless and enterprise networks, targeting carriers,enterprise customers and small and medium-size businesses, theysaid.

They hope that their collaboration will result in products withMicrosoft’s reputation for ease of use and Nortel’s for networkreliability.

“We’ll be able to give our customers reasons to rethink theircommunications strategy and to expect much greater value from theircommunications investments,” said Mike Zafirovski, Nortel’spresident and chief executive officer.

To market the jointly developed products, the companies haveformed an organization called the

Innovative Communications Alliance. They will build a jointsales channel with its own training and incentive program, theysaid.

Nortel will also become Microsoft’s systems integration partnerfor advanced unified communications products. The deal could bringNortel as much as US$1 billion in additional revenue, the companysaid. Nortel had revenue of around $10.5 billion in 2005.

The companies’ chief executive officers, Steve Ballmer and MikeZafirovski, will give more details at a news conference laterTuesday.

The jointly provided and developed products and services fromMicrosoft and Nortel will provide a transition path that will letcustomers protect their existing communications investments whiletaking advantage of new technology, Ballmer said.

“This alliance means that our customers will very quickly beable to evolve from using traditional business phone systems to theMicrosoft/Nortel unified communications software platform,” Ballmersaid.

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